British shares nosedive

Battered shareholders endured another miserable session in the City today as the FTSE 100 Index tumbled through the key 4,000 barrier.

Only 11 of Britain’s biggest companies made any progress as fears over the health of the US economy and nerves over an attack on Iraq held sway.

US telecoms equipment giant Lucent rocked confidence with a profits warning while consumer sentiment data in the US came in below expectations.

At one point in London, the Footsie was down a massive 157 points before a brief rally saw it close down 76.9 points at 4008.0.

Analysts were shocked by the size of the falls given yesterday’s 125.8 point slide and said it raised fears about a further sell-off next week.

Tom Hougaard of City Index said: “The big question is, can we hold here or are we going to go down to new levels?

“Anything can happen in the next week due to the volatility but everything, earnings updates and economic news, is pointing down at the moment.”

Insurers were among the heavy fallers with Royal & Sun Alliance down more than 7%, Lloyds TSB off 4% and fund manager Amvescap, sliding 6%.

And British Airways suffered further embarrassment, closing down another 3% to end the day at 123.25p, below its 1987 flotation price of 125p.

The Footsie has now fallen almost 10% since its recent high of 4449.70 at the end of August. Its lowest point this year was 3777.10 on July 24.